In just a year, Clubhouse’s explosive growth forced industry incumbents like Facebook, Twitter, and Spotify to introduce similar audio products, or in some cases, make strategic acquisitions within the space. Amazon is working on its own Clubhouse competitor, according to The Verge.
But the hype around social audio began to tail off around April, which is ironically when the company announced a series C funding round. The round reportedly valued Clubhouse at $4 billion, but it’s unclear what the start-up is worth today.
Early on, exclusivity helped Clubhouse, which ranked No. 33 on this year’s CNBC Disruptor 50 list. The number of people who could join was capped, and new users needed an invite from a member and the company only expanded from iOS to Android devices this May after a year of iPhone exclusivity. In July, as part of an effort to reach more people, Clubhouse ditched the invite-only rule and opened the app up to everyone.
For co-founder and CEO Paul Davison, a former Google intern, it was a necessary shift toward scaling the technical infrastructure and increasing the size of his team as opposed to launching new features and refining the app. But Davison has since been able to focus on the latter: just last month, Clubhouse launched two new features in a bid to separate itself from the competition and continue its early momentum.
CNBC recently spoke with Davison, who maintains that user retention is strong and argues that our re-emergence into society will prove to be just as big of a boon for the company as pandemic-induced lockdowns were in its early days.
The following Q&A has been edited for length and clarity.
CNBC: Do you share the view that Clubhouse’s hypergrowth was a result of the pandemic?
Davison: Rohan and I created Clubhouse just before lockdown. Our goal is always to grow the platform in a gradual way as we know that’s optimal for the community itself but the reality of being a brand new platform means that waves of growth like we saw in February, this summer, and right now are inevitable. The good news is throughout this year we’ve added tons of new features and made dramatic improvements to the experience of using the platform and our retention, anchored by the community on Clubhouse, remains strong.
CNBC: We’ve seen stay-at-home stocks get clobbered as investors continue to bet that we’re going back to some semblance of normal. The company’s hypergrowth proves that it was an early beneficiary of the pandemic, but how are you thinking about growth in a world where listeners aren’t at home 24/7? What’s next for Clubhouse?
Davison: Over the summer, the world started to open up again while our community continued to grow. Similar to podcasts, Clubhouse is becoming a platform for people listening on the go. From commuting, going to the gym, folding laundry at home, people are tuning in to hear Oprah recap her interview with Adele or learn about what’s going on with NFTs. Clubhouse is another complement to our real-world behavior, similar to how people aren’t going to stop using dating apps because bars are open or stop shopping on Amazon because they can go to stores.
We’re in an exciting new chapter for the company as we just launched a series of product updates over the last few months. Our creators are able to share top moments of their rooms through our new features like Clips and Replays and are able to further engage with audiences through Pinned Links. With this evolving experience, we’re seeing creators create genuine connections with audiences which drives people to come to the app.
CNBC: In this next phase, how are you thinking about competition with big platforms like Facebook, Twitter and Spotify? Can Clubhouse survive as a single product app? When you look back, was audio exclusivity a mistake?
Davison: It’s interesting to think about how just two years ago, social audio didn’t exist at all. We believe that focus is crucial as it allows us to prioritize delivering for our community. This singular vision combined with the speed with which we can innovate and deliver new features ensures that we can deliver a best-in-class audio experience. Audio is a durable medium, and has been a primary one since nearly the beginning of time. Rohan and I believed in 2020 that an audio-only social platform would open up another form of communication and allow people to communicate in an authentic, unfiltered way, and we’ve seen just that.
CNBC: You recently told The Hollywood Reporter that Clubhouse is building out “foundational features” to transition from a prototype to a “real company.” What did you mean by that and how does it differ from Clubhouse as we know it today?
Davison: Up until this past July, we were in beta and heavily relied on the invite system to control our growth and prevent the platform from breaking as we continued to build. In beta, we rolled out features like Payments which was just the start of the monetization tools we had planned for creators and the Backchannel to allow users to message each other. These basic tools were the foundation of the app we aimed to create.
When you open the app now, you see an enhanced version of Clubhouse with an improved search feature, topics tagged to rooms, links pinned to the top of your room and so much more. We’ve also been working on localization, making Clubhouse available in 26 languages and allowing international users to see the app in their native language. In the year ahead, we’ll continue to take in feedback from our community to hear what we can do to improve experiences and what tools creators need to further thrive on the app.
CNBC: Earlier this week BuzzFeed became the first significant modern digital media company to enter public markets, and the expectation is that their performance will be closely watched by not only investors, but also industry peers. How are you thinking about the public markets on your quest to become a “real company”?
Davison: Eighteen months in, it’s still early days for our company. At the beginning of this year, there were less than ten people. Today we have more than ninety and we’re just getting started.
— CNBC’s Sam Shead contributed to this reporting.
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